CATA News

One-Third of Americans Would Consider EV Purchase

Just over one-third of Americans would consider buying an electric vehicle for their next model, a new Reuters/Ipsos poll found. The seven-day poll completed on Monday found 34% of all respondents would consider an EV, while 31% said no. Among Democrats 50% said they would consider an EV, while 26% of Republicans and 27% of independents said they would consider. (Source & full article: Reuters)

EV Sales Expected to Reach Historic Highs this Year as Affordability Improves

Sales of electric vehicles are expected to reach historic highs this year in large part because they’re becoming more affordable, according to a new J.D. Power study released this week. However, shoppers who are interested in an EV but still can’t afford a new one, won’t find much relief on used car lots. Consumers have long cited high prices as a roadblock to buying an EV, but the new study states “approximately half of all vehicle shoppers nationwide will have a viable EV option available to them by the end of 2023. By the end of 2026, that number is expected to surpass 75%.” (Source & full article: Forbes)

The Federal Reserve Bank of Chicago is looking to update its Beige Book Dealer Survey. This survey will be combined with information received from other economic sectors and will be summarized and inserted into the Federal Reserve’s Beige Book. The Beige Book is the Fed’s update on current business conditions that allows us to see if Main Street conditions match what the statistical data are telling us. The Beige Book is released 2 weeks before each FOMC meeting. The FOMC meeting is the one that decides what to do with monetary policy and short-term interest rates. When the Beige Book is published, nothing will be able to be directly attributed to any one person or firm because the Beige Book is information gathered from hundreds of different sources that is organized by economic sector.

Click here to download the ONE-PAGE survey in Microsoft Word. Then please email completed surveys to Mark Bilek at the CATA. All information will be kept confidential.

Annual CATA Member Golf Outing: Tuesday, June 13

BBQ for the Troops: Saturday, July 15

Chicago Drives Electric Dealer Day: Thursday, September 28

The Internal Revenue Service today issued Notice 2023-16 that modifies the definitions of certain vehicle classifications for the new, previously owned and qualified commercial clean vehicle credits. As a result of this notice, the IRS updated the related frequently-asked-questions (FAQs) for these credits.

Today’s guidance modifies Notice 2023-01 by changing the vehicle classification standard by which vans, sport utility vehicles, pickup trucks and other vehicles are defined. Fact Sheet 2023-4 updates FAQs related to new, previously owned and qualified commercial clean vehicles.

The FAQs revisions are as follows:

These FAQs are being issued to provide general information to taxpayers, tax professionals and others interested in the issue as expeditiously as possible. More information about reliance is available here.

The NADA also provides additional guidance:

Effective Jan. 1, 2023, a federal previously-owned clean vehicle tax credit (Used EV Credit) potentially applies to used battery electric (BEV), plug-in hybrid electric (PHEV), or fuel cell electric (FCEV) vehicles sold by licensed dealers between 2023 and 2032. The maximum Used EV Credit is the lesser of $4,000 or 30% of the sales price. But, as detailed below, many used EV sales will be ineligible for a Used EV Credit. To the extent possible, before buying a used EV, determine whether a Used Vehicle Credit may apply when the EV is later sold by the dealership.  

I. For starters, to be eligible for a Used EV Credit, used EVs must:

Bottom Line: The above requirements should be easy to determine prior to buying a used EV.      

II. Also, to be eligible for a Used EV Credit, a used EV may not have been sold after 8/16/22 to a Qualified Buyer who was not the original owner. A Qualified Buyer is someone who:

Bottom Line: If a used EV is sold after 8/16/22 to a Qualified Buyer who was not the first owner, the Used EV Credit is no longer available for that EV. However, it may be difficult to determine with certainty whether a prior used EV owner was a Qualified Buyer. Yes, a vehicle history report should show if a used EV was sold after 8/16/22 to an individual who took title in the United States in his or her name. But, determining whether that buyer was deductible on someone else’s taxes, or previously claimed a Used EV Credit, will be difficult at best. Only if a used EV was not sold after 8/16/22 or was sold since then but only to non-individuals (e.g., businesses), will it be reasonable to assume that it was not previously sold to a Qualified Buyer and may qualify for a Used EV Credit.    

III.  When a used EV is sold at retail, four additional requirements must be met for a Used EV Credit to apply. Specifically:   

[1] $150,000 for married filing jointly or a surviving spouse, $112,500 for heads of households, $75,000 for all other tax filers

Bottom Line: Even if one or more of the above four requirements cannot be met, customers often will be willing to purchase a used EV without a federal Used EV Credit.  

The Internal Revenue Service issued a renewed warning urging people to carefully review the Employee Retention Credit (ERC) guidelines before trying to claim the credit. Apparently, certain promoters continue pushing ineligible people to file.

The Acting IRS Commissioner recently stated: “While this is a legitimate credit that has provided a financial lifeline to millions of businesses, there continue to be promoters who aggressively mislead people and businesses into thinking they can claim these credits. Anyone who is considering claiming this credit needs to carefully review the guidelines. If the tax professional they're using raises questions about the accuracy of the Employee Retention Credit claim, people should listen to their advice. The IRS is actively auditing and conducting criminal investigations related to these false claims. People need to think twice before claiming this.”

Read the recent IRS news release in its entirety here. NADA also has an article "A Guide to Claiming the Employee Retention Tax Credit" here.

A high volume of CATA dealers have raised the request for the CATA to host a fundraiser for Paul Vallas’ campaign for Mayor of Chicago. The CATA took this request to the CATA board who has agreed, given Vallas’ pro-business beliefs and heavy focus on public safety and addressing crime that has affected so many of our members’ dealerships. 

The McGrath family has offered its McGrath Lexus of Chicago dealership as the fundraiser venue, located at 1250 W Division St., Chicago, 60642. It will be held over the lunch hour on Friday, March 24 from 11:30 a.m. - 1:30 p.m. Light catering and refreshments will be served.

CATA member dealers are asked to complete the survey ASAP so that we can gauge your plans to attend and/or contribute to the effort.

To make the greatest impact, we will collect your individual contributions and make sure every dealer gets credit while showing the collective support of the retail auto industry.

If you are unable to attend the fundraiser, checks may be mailed in advance to the CATA headquarters (18W200 Butterfield Rd., Oakbrook Terrace, 60181) to arrive on or before Thursday, March 23 and we will ensure to personally hand them to Vallas at the fundraiser. Please address checks to "Vallas for Mayor" (NOT CATA) and ensure the envelope is to the attention of Jennifer Morand, CATA Co-President.

Help us help you! You should have received an email with a link to the survey earlier this week. We’re calling all members to fill out this brief survey to gauge your communication preferences regarding association news, announcements, resources and events. Your feedback is very important to us.

Every year around this time people gather around their televisions or take an extended lunch break at work to see how their college basketball brackets are doing. The NCAA College Basketball Tournament is an exciting time for people to show off their school pride and to root for “Madness”. For years the tournament has been called “March Madness” because every team has a chance to win a game despite the size or basketball ranking of the universities playing.

But did you know that the term “March Madness” became popular because of a car dealership?

In the 1982 tournament, Brent Musburger was working at the local CBS affiliate in Chicago where he saw “March Madness” in an ad from a local auto dealer. The dealer was tying in the local high school basketball tournament with a marketing campaign to sell new cars. Musburger started using the catch phrase during the tournament and it stuck.

The phrase March Madness can also be traced back to 1908 when Henry V. Porter of the Illinois High School Association started referencing the local high school basketball tournament in an essay entitled March Madness, and a poem “Basketball Ides of March”.

Although there have been numerous legal battles regarding ownership of the term over the years, the NCAA legally trademarked the phrase in 2000.

So, as you keep track of your brackets and watch the games this year, just know that the multi-million-dollar phrase was made popular thanks to a local car dealership.

With the Chicago Auto Show in the rear-view mirror, CATA offices and operations are back to normal. Office hours are 9 a.m. – 5 p.m. Monday through Friday. Dealer forms are available for order via the association’s membership portal, www.cata.info. For portal login information, to renew membership dues or to reserve meeting space, call the CATA office at (630) 424-6082.

The BBB has become aware that some dealers may be lowering the amount of their advertised prices by including federal tax credits that are available for certain electric vehicles (EVs) and only to certain consumers who qualify. An example would be the following:

Dealers are prohibited by rule 475.310 from advertising prices that are not available to consumers. The rule states, “Purchasers shall be able to purchase all vehicles described by the advertisement at the advertised price.”

The sale price of $52,000 is not available to purchasers for many reasons.

First, tax credits are not manufacturer or dealer discounts that are applied at the time of sale, creating an immediate savings to consumers. Taxpayers who qualify may claim a tax credit at the time of their annual income tax filing but not before that. 

In addition, taxpayers may qualify for limited amounts of the up to $7,500 federal tax credit because individuals are entitled to a tax credit amount only to the extent of their income tax liability with a cap of $7,500 for the taxable year. In other words, consumers must owe money to the IRS to claim a tax credit.      

There are also income caps to qualify for the credit, as well as restrictions based on where the vehicle is manufactured and the amount of domestic content.

Most consumers will not qualify for the entire $7,500 tax credit, if at all.

Third, tax credits apply only to certain EVs that meet precise standards set out in the legislation creating the tax credits. Non-qualifying EVs do not provide tax credit to consumers. The limitations on the types of EVs that qualify for the tax credit are numerous. 

There will soon be additional qualifications for batteries installed in EVs, making the tax credit less available.

As a result, dealers should not reduce their advertised price by the amount of any tax credit because that reduced price is not available at the time of sale. Moreover, not all consumers or vehicles will qualify..  

The BBB suggests that dealers should certainly advertise the availability of tax credits to fully inform consumers that they may apply to certain vehicles and that consumers must first qualify to receive them. Well-crafted disclosures are important. However, any tax credit amount must not be included in the advertised sales price.

The BBB will notify dealers when such price advertisements come to the attention of the BBB in an effort to preserve a marketplace that is fair to all dealers and truthful for consumers. The BBB remains committed to ensuring that all dealers compete on a level playing field as we have for the duration of the BBB/CATA advertising review program. As most dealers know, the BBB/CATA advertising review program has existed since 1996 and has provided valuable notice to dealers when there may be advertising issues that impact the Illinois Motor Vehicle Advertising Regulations which are enforced by the Office of the Illinois Attorney General. These regulations were developed with Illinois dealer input and reflect standards that the dealer community considered important to create a fair and truthful marketplace for business and consumers. 

The BBB is proud to work continuously since that time to assist dealers with respect to these rules.

Patricia Kelly, BBB Senior Counsel, can be reached with questions at pkelly@chicago.bbb.org.